David Einhorn Pens The "Flowers For Algernon" Of Investor Letters

Stop what you're doing and send a hug into the universe for what's left of David Einhorn's psyche.
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We've read a few hedge fund investor letters in our time, and we'd like to think that we have a feel for the tone and meter of how hedge fund managers convey their innate undeniable brilliance despite what the performance of their actual fund might indicate.

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Up, down, or sideways, the true legends of the game always keep it 100 when it comes to their confidence in themselves. Investors need to know that those losses are fixable because this master of the universe has this situation on lock. It's almost a comfort to read that these guys are still able to put an ego flourish on a letter admitting to objectively shameful performance.

But today we read something that turned our world upside down.

We knew that things have not been going well for David Einhorn over at Greenlight Capital for a while now, and we had more than an inkling that it was taking a toll on the man as well, but after reading the Greenlight Q2 letter to investors, we simply want to find David Einhorn and hold him in our arms. Just hold him tight and tenderly whisper "This too shall pass..."

We had another difficult quarter and lost an additional (5.4)%,1 bringing the Greenlight Capital funds’ (the “Partnerships”) year-to-date loss to (18.3)%. During the quarter, the S&P 500 index returned 3.4%, bringing its year-to-date return to 2.6%.
Over the past three years, our results have been far worse than we could have imagined, and it’s been a bull market to boot. Yes, we have made some obvious mistakes – the worst of which was not assessing that SunEdison was a fraud in 2015 – but there have been others.

This. Is. Harrowing.

We've never seen a hedge fund manager this despondent. And we write about Ackman all the fucking time.

Oh, and if you're wondering if Einhorn addressed his divorce, umm, we're pretty sure he did!

Some have looked for reasons other than isolated mistakes. Theories include getting older, changing lifestyles, and an unwillingness to adapt to new market environments. We have been accused of being stubborn, but one person’s stubbornness is another person’s discipline. We will continue to be disciplined. Although it might be nice to have something to blame for the poor results, the truth is that we have been making every effort and leading with our best thinking.

Being down more than 18% on the year is bad. It's real bad, but should it snuff out the light in David Einhorn's soul? No. The Mets should do that [poor guy can't catch a break].

We want to be careful and not share too much of the letter, less because of propriety and more because we don't think you'll ever smile again if you read the whole thing, but this felt like something you should read before going to light a candle for what's left of David Einhorn's fragile psyche...

Right now the market is telling us we are wrong, wrong, wrong about nearly everything. And yet, looking forward from today we think this portfolio makes a lot of sense.

Even Ackman never admitted to feeling this low.

Related

David Einhorn Said No To A Capital Raise, Kept The Door Open For A Pub Crawl

Remember how David Einhorn got in trouble in England for insider trading on Punch Taverns stock and he was all "what?" and we were all "what?"? Well, you can judge it for yourself because now the entire disputed call with Punch is available online (at the back of this). So go read it, or read the highlights here. The FSA still thinks it's insider trading, but the count of people confused by the whole thing is rising, and now includes the Merrill banker on the call. There's lots of insider traderiness on this side of the pond today too so we should talk about that in a bit. For now, though, two other things. One is quick - no one can resist one part of the call and I can't either so here it is: DAVID EINHORN: Hi, I’m sorry I didn’t get to see you when you were in New York. PUNCH CEO: No, no, we -- well, we’ve -- we’ve only had the chance to speak once, although we have seen [reference to Greenlight Analyst] a few times since then. DAVID EINHORN: Oh, you’re -- you’re -- you’re getting more than -- than I could help with anyway. So, this is good. PUNCH CEO: Okay. That’s fair enough. Well, one day we’ll get you around on a pub crawl around some English pubs. DAVID EINHORN: Oh, that sounds fun. PUNCH CEO: It is. You’re right. English readers: Is it? I just assumed that Punch Taverns are rather grim places, like TGI Friday's but with more ... punching? ... but maybe I'm totally off base here. Also, here is a hypothesis: vice investments do well because, for the same level of profitability, they get more analyst/investor coverage and enthusiasm. Wouldn't you rather go on a pub crawl instead of like a tour of an auto parts factory in Queens? Would that influence your stock recommendations / money allocations? Someone should do a study.

Warren Buffett And David Einhorn Are In Agreement Re: The Frigidity Of Their Disfavored Investment Ideas

Back in February, in his annual letter to investors, Berkshire Hathaway chief Warren Buffett spent a good bit of time discussing why one shouldn't own gold. Beyond the fact that, according to WB, gold doesn't "change in size and [is] incapable of producing anything," and you'd be much better off buying farmland (which "a century from now will have produced staggering amounts of corn, wheat, cotton and other crops and will continue to produce that valuable bounty") or shares of Exxon Mobil (which "will probably have delivered trillions of dollars in dividends to its owners," the Oracle of Omaha had one incontrovertible, be all end all reason for eschewing the metal: its unfuckability. Oh sure, you can do things to a cube, you can fondle it, you can talk dirty to it, you can send nude pictures of yourself, you can even drill a hole in it and fuck it senseless, but, the thing is, the cube will not respond. No reciprocation, no gratitude, not even a sign it enjoyed itself.  For Buffett, no further argument was necessary as to the worthlessness of the commodity. (Silver, on the other hand, will make you feel like you're 18 again.) Anyway, David Einhorn sort of feels the same way about the dollar. Greenlight Capital 1Q2012 Letter To Investors [PDF] Related: Don't Think He Hasn't Tried